Inside the Currency Market: Mechanics, Valuation, and Strategies

British Pound Yield Curve

Notice Exhibit 6.15, the yield-curve chart of British gilt bonds. This is from the three month to two year, and further notice the earlier two- and 10-year Treasury yield spread. Further, refer to the Treasury Yield Curve chart and notice the difference in yields.

Notice Exhibit 6.16, gilt yields from 2005 to 2010 and notice Exhibit 6.17, monthly chart of British pound/U.S. dollar. Under good economic conditions between the United States and United Kingdom, it is a buy British pound/U.S. dollar. When conditions turn down, it is a sell British pound/U.S. dollar.

The gilt Yield Curve differs from Japan and the United States on the long end of the curve. The Debt Management Office in Great Britain issues 50-year gilts as ...